Correlation Between HOYA Resort and Johnson Chemical

Can any of the company-specific risk be diversified away by investing in both HOYA Resort and Johnson Chemical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HOYA Resort and Johnson Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HOYA Resort Hotel and Johnson Chemical Pharmaceutical, you can compare the effects of market volatilities on HOYA Resort and Johnson Chemical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HOYA Resort with a short position of Johnson Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOYA Resort and Johnson Chemical.

Diversification Opportunities for HOYA Resort and Johnson Chemical

0.25

Correlation Coefficient

HOYA Resort  Johnson Chemical

Modest diversification

The 3 months correlation between HOYA and Johnson is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Resort Hotel and Johnson Chemical Pharmaceutica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Chemical Pha and HOYA Resort is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HOYA Resort Hotel are associated (or correlated) with Johnson Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Chemical Pha has no effect on the direction of HOYA Resort i.e., HOYA Resort and Johnson Chemical go up and down completely randomly.

Pair Corralation between HOYA Resort and Johnson Chemical

Assuming the 90 days trading horizon HOYA Resort Hotel is expected to generate 2.55 times more return on investment than Johnson Chemical. However, HOYA Resort is 2.55 times more volatile than Johnson Chemical Pharmaceutical. It trades about 0.12 of its potential returns per unit of risk. Johnson Chemical Pharmaceutical is currently generating about 0.0 per unit of risk. If you would invest  1,885  in HOYA Resort Hotel on October 12, 2024 and sell it today you would earn a total of  160.00  from holding HOYA Resort Hotel or generate 8.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HOYA Resort Hotel  vs.  Johnson Chemical Pharmaceutica

HOYA Resort Hotel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HOYA Resort may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Johnson Chemical Pha

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Chemical Pharmaceutical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Johnson Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HOYA Resort and Johnson Chemical

The main advantage of trading using opposite HOYA Resort and Johnson Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOYA Resort position performs unexpectedly, Johnson Chemical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Johnson Chemical will offset losses from the drop in Johnson Chemical's long position.

The idea behind HOYA Resort Hotel and Johnson Chemical Pharmaceutical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..